Opening a new business in Alexandria? Check the lease

For Joanne Sapp, the first-floor space in the building at 1314 King St. was perfect. It had everything she wanted — an Old Town address, a big window space to showcase her shop’s clothing and a large floor plan — for the second location of Deja Vu Boutique.

Sapp quickly signed a three-year lease, working without a broker or attorney, and began renovating the space.

But entering into the agreement before performing due diligence is a move she has come to regret. Even after more than $40,000 in work, Sapp’s landlord has piled on additional requests for improvements — expensive improvements. For the boutique owner, hindsight is 20/20.

“I should’ve worked with a real estate person,” Sapp said. “But I didn’t, and that was a mistake.”

Tenant-landlord relationships can hit rough patches, but while residential renters often have municipal entities on their side — such as Alexandria’s Landlord-Tenant Relations Division — commercial tenants only are protected by the stipulations they negotiate with the property owner.

“More safeguards are in place for the residential arena,” said Michael Chamowitz, an estate attorney who owns the Law Offices of Michael Chamowitz. “In a typical landlord-tenant case, there are no real statutory protections. You have a long commercial lease that’s oriented toward the landlord.”

It’s a discovery Sapp has made the hard way. She faces eviction for failing to complete tasks such as re-wiring the King Street building after already investing tens of thousands of dollars into her new location.

And with her busiest time of year — prom season — fast approaching, moving is not an option.

Commercial tenants throughout the city and state have faced this dilemma. Sapp’s location has seen a lot of turnover, said Christine Mindrup, vice president of commercial real estate for the Alexandria Economic Development Partnership. Previous tenants fled rather than deal with the landlord’s requests.

And while they may hope there are laws in place to protect them from landlord abuse, as Sapp did, their only governing document is the lease they sign.

“What’s contained in the lease is the only recourse she has,” Mindrup said. “I don’t know what other recourse there is.”

Often, Mindrup said, small-business owners become overwhelmed with excitement at the prospect of opening a space and enter into leases without taking proper precautions. She encourages tenants to hire a broker to advocate on their behalf. Brokers, she said, serve as conduits to help negotiate the lease — and protect the tenant from signing documents with loopholes that serve the landlord.

However, landlords can refuse to accept a broker’s services, which is common practice along King Street, Mindrup said. And this is where tenants can get into trouble.

Landlords are required to pay the broker’s commission — if both parties agree to use one — and many would prefer not to shell out the cash. Instead, it’s easier to put a “for rent” sign in the window to attract potential tenants, thus avoiding a broker.

But, Mindrup said, potential tenants should still hire an attorney to read over the lease. More often, though, retailers just sign the documents, leaving them in a bind similar to Sapp’s situation.

It’s well known the real estate climate in the commonwealth favors landlords, Chamowitz said, and tenants in surrounding jurisdictions face a similar lack of protection under the law.

“I think the Virginia Legislature is moving away from a buyers’ beware philosophy with respect to residential tenants and moving closer to a situation where the state is trying to create a more-level playing field for residential tenants but doesn’t feel as though it’s necessary to do the same for commercial tenants,” Chamowitz said.

But across the Potomac, laws act to the contrary. While Virginia favors the property owner, District laws are much more protective of the tenants.

“It’s a very different kind of situation,” Chamowitz said. “The District of Columbia is very different than Virginia.”

Still, Sapp is holding out despite the requests from her landlord, which includes replacing the building’s heating, venting and air-conditioning rooftop unit and relocating the hot water heater. Citing pending litigation, her landlord declined to comment for this story.

Sapp hopes to take her plight before City Hall in an effort to get commercial tenant-friendly laws passed. But, until then, she will remain in her location while juggling the ever-increasing improvement requests.

“There should be laws in place to protect everyone, not just for residents,” Sapp said. “There’s nothing to protect me from her.”

1 COMMENT

Hiring a savvy attorney like Michael Chamowitz would have saved Joanne a lot of sleepless nights and the possible ruin of her business. Unfortunately, many landlords are wolves in sheep’s clothes as they smile and lament about how they are your best friend, until you have an issue and then they throw the lease at you with an even bigger smile on their face.

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